Affordable housing gets foothold despite economic challenges

MEMPHIS, Tenn. (AP) — Next to a group of homes built 10 years ago on Whitney Avenue in Frayser, two more new homes are now ready for owners.

View all (4)

"This is a work in progress. It's working and we are making progress," Frayser Community Development Corporation president Steve Lockwood said of the construction.

Work is ready to begin on eight additional homes in the same area of Whitney and Woodlawn Terrace. The construction is a collaboration of the Frayser CDC, United Housing and the city, which put up $470,000 in Housing and Community Development funding.

With the money from the sales, Lockwood said his organization hopes to start the ball rolling on 30 more housing sites.

"We've done hundreds of rehabs," he said. "This (new construction) makes a statement, a really visual statement that is different than the rehabs that we do."

In the backyard between the two new homes in a neighborhood with housing stock going back to the 1940s, Lockwood and Memphis Mayor Jim Strickland talked about two years of increases in property values in Frayser.

Several years ago, Lockwood began an advertising campaign that compared a $400 monthly mortgage payment in Frayser to $700-a-month rent elsewhere in a city where affordable housing has usually meant rental housing.

"I think the partnership to build these first 10 homes, which will then lead to 30, is making a statement that we can make investments - new investments - of new construction in Frayser, and it will work financially and as a result improve the quality of life in Frayser," Strickland said.

He pointed to 5,100 units of affordable housing during his term of office, either rehabbed or built new citywide.

"We are working on the rental side and we are working on the ownership side," Strickland said.

The ownership side is more than building new homes at affordable prices. It is also rebuilding confidence in a home ownership system where abuses of subprime lending to finance home purchases did a lot of damage locally.

Ralph Perrey, executive director of the Tennessee Housing Development Agency, said Memphis lost more homeowners than any other city in America except Philadelphia in the Great Recession - the worst national economic downturn since the Great Depression.

Governing magazine puts the Memphis total at 66,000 fewer homeowners from 2006 to 2017.

"I think there is a base to be rebuilt," Perrey said during a recent stop in Memphis.

"Memphis has challenges. This was a place that saw an awful lot of subprime lending activity," Perrey told The Daily Memphian. "A lot of people who had good loans were talked into equity-stripping refi (refinancing). So they turned cash out. When the economy crashed, they didn't have the cushion they needed to survive. A lot of people lost homes."

THDA offers 5% of the purchase price to help toward down payments and closing costs as well as financial counseling and efforts to improve credit scores.

"I think you have plenty of people who had a very bad experience with the economic downturn but their finances have largely recovered, their credit has largely recovered," he said. "What hasn't recovered is their confidence. They are not sure the system works for them. Once burned twice shy."

Larry Alexander, the Realtor involved in the sales on Whitney, said there is demand.

"People are lined up for the housing as soon as they hit the market," he said. "These are great starter houses."

And he points out there is no shortage of lots in Frayser where homes once stood.

Perrey said there are complications, however, at other points in the housing pipeline.

"Every place in America can use an increase in supply. There aren't a lot of financial incentives right now to build at entry level price points," he said. "There are many fewer people in the home building business. . We see a little bit of those pressures everywhere."

The Memphis housing market is more affordable than many other places in the state.

"The challenge is that overall incomes tend to be lower as well. That kind of cancels out part of that advantage," Perrey said. "We are likely to see more households in Memphis identify themselves as cost-burdened whether they have bought the home or are renting. There's still some economic challenges. We've got responsible financing options available."

___

Information from: The Daily Memphian, http://https://www.dailymemphian.com/